First Home Savings Account

FHSA

A registered account for first-time buyers: deductible contributions of $8,000 a year up to $40,000, and tax-free withdrawals for a home.

The First Home Savings Account (FHSA) is a registered account that helps first-time buyers save for a home. It combines two familiar tax benefits. Contributions are generally deductible, like an RRSP. Qualifying withdrawals to buy or build a first home are not taxed, like a TFSA.

Any resident of Canada who is a first-time home buyer can open one from age 18, or 19 where that is the legal age in the province, until December 31 of the year they turn 71. You can contribute up to $8,000 a year, including the year you open your first FHSA. The lifetime maximum is $40,000. Unused room carries forward to the next year, but only up to $8,000. Transfers from an RRSP count toward these limits but are not deductible.

Contributions can be used to reduce your tax, which makes the account especially useful in higher-income years. Room starts only once you open your first FHSA. Opening one early, even with a small deposit, can let you build up carry-forward room for later years. Holding the room without using it costs nothing.

The account has a time limit. You must close all your FHSAs by December 31 of the year of the earliest of three events. These are the 15th anniversary of opening your first FHSA, turning 71, or the year after your first qualifying withdrawal.

If you do not buy a home, the savings are not lost. You can generally move the balance to an RRSP or RRIF on a tax-deferred basis. Other withdrawals are taxable income in the year you receive them. You can also use the FHSA with the RRSP Home Buyers' Plan for the same home. You must meet each plan's conditions at the time of each withdrawal.

General information only, not legal, tax, or financial advice. Rules change and vary by province; confirm the current details with the relevant authority before you rely on them.